CLOSING THE DEFICIT

How the governor would cover the $19.1 billion budget gap for 2010-11:

• $12.4 billion in spending cuts

• $3.4 billion in federal money

• $3.3 billion in other measures, primarily through borrowing from other state funds

SACRAMENTO  Gov. Arnold Schwarzenegger on Friday alarmed some San Diego County officials by proposing to wipe out California’s main welfare program and make deep cuts in other social services.

Schwarzenegger said the cuts, while painful, are necessary to close a $19.1 billion budget deficit after he and the Legislature have already resorted to other spending reductions, tax increases, borrowing and accounting maneuvers to close a $60 billion budget gap over the past two years.

“California no longer has low-hanging fruits,” the governor told a Capitol news conference as he proposed a revised, $83.4 billion general-fund budget. “As a matter of fact, we don’t have any medium-hanging fruits. We don’t have any high-hanging fruits. We literally have to take the ladder away from the tree and shake the whole tree.”

San Diego County Supervisor Dianne Jacob denounced the welfare cuts in the proposed budget.

“This takes the prize as the ugliest state budget proposal I have ever seen,” Jacob said. “They dug a deep hole, and they’ve run into a rock. … In the end, it will be innocent children, families and senior citizens who suffer. It’s just not fair.”

Barbara Mannino, chief executive officer of the Vista Community Clinic, complained that proposed Medi-Cal reductions, which would limit patient visits and prescriptions, would hamper her ability to treat patients. Her clinic and others like it, which primarily treat the working poor and uninsured, suffered deep funding cuts last year.

“We don’t have room,” Jacob said. “They will be out in our neighborhoods. Every citizen should be up in arms.”

Schwarzenegger’s revised budget for the new fiscal year avoids raising taxes and largely protects public education, but eliminates the state’s welfare-to-work program, known as CalWORKS.

Legislative Democrats promptly drew a line in the sand over eviscerating CalWORKS, which would strip benefits from 1.4 million Californians, two-thirds of them children.

“It is a nonstarter,” said Senate President Pro Tempore Darrell Steinberg, D-Sacramento. “If, God forbid, this budget becomes a reality, California would be the only state in the Union to not have a safety net for children.”

CalWORKS provides cash assistance of up to $694 a month for families and helps single mothers with job training and child care.

Schwarzenegger backed away from an earlier plan to eliminate the Healthy Families program, which provides health care to children from low-income families. But he did propose cutting $15 million from the program and shifting more costs to recipients.

Legislative Republicans, most of whom vigorously protested $16 billion in temporary tax increases used to help balance last year’s budget, were largely satisfied with Schwarzenegger’s new plan.

“The spending reductions are unfortunate but necessary to begin restoring our budget’s fiscal health,” said Senate Minority Leader Dennis Hollingsworth of Temecula. “The preservation of education, public safety and infrastructure priorities is important, and that shows in this budget. Getting spending under control while not raising taxes further, if coupled with job-creating proposals, is the only way we will get our economy back on track and our budget back to health.”

Business leaders also hailed the absence of tax increases in the budget.

“Just like any small business in San Diego, the government needs to look at its programs and needs to reduce expenditures when revenues are down,” said Ruben Barrales, president and CEO of the San Diego Regional Chamber of Commerce.

Democrats want to take back $2 billion in corporate tax credits that Schwarzenegger and legislative Republicans have won in recent years.

“We must claw back tax credits for corporations that abandon California, implement an oil severance tax like all other states and ensure the wealthy pay their fair share,” said Sen. Leland Yee, D-San Francisco. “For too long, we have allowed Republicans to keep taxes off the table.”

Schwarzenegger proposed changing the formula for calculating state funding for kindergarten-through-12th-grade education and community colleges. That would save the state $2 billion and give schools about the same amount of money they got last year. The governor also plans to scrap state subsidies for child care, affecting 142,000 children.

“The May revision does not improve the situation, but at least it does not make it too much worse,” said Bill Kowba, interim superintendent of the San Diego Unified School District. The San Diego school board has approved $87 million in cuts to next year’s $1.2 billion operating budget.

University officials in San Diego felt they dodged a bullet but worried that legislators may look to cut from higher education to avoid reductions in other areas.

“So far, so good. Remember, it’s a long process,” said Stephen Weber, president of San Diego State University. “The good news is the governor held on in spite of some slightly worsening revenue projections. In that regard, it will be a starting point for a long legislative conversation.”

Gary Matthews, vice chancellor for resource management and planning at the University of California San Diego, said: “If revenues do not materialize or federal funds do not arrive, then we could be in worse shape. It’s certainly no celebration.”

Legislators are already on their annual collision course over spending priorities. Democrats insist they will not allow programs that the needy depend upon to be gutted. How to preserve them without new taxes, which Republicans just as adamantly oppose, is unclear.

Despite Democratic majorities in both houses of the Legislature, passing the budget requires a two-thirds vote, meaning a few Republicans will have to be won over.